Ripple’s David Schwartz Spams Our Epic Fail Column — Reddit Nailed It

David Schwartz dredges up an argument over spam transactions that's Python-esque in its absurdity... and is there a way we can express our approval of Reddit's crypto play, some kind of virtual thumbs-up?

by Paul de Havilland 3 min May 16, 2020
David Schwartz Ripple CTO Epic Fail Reddit Nailed It
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The Most Efficient Sprinkler of Spam The World Has Ever Seen

David Schwartz, Ripple Labs’ Chief Technology Officer, cropped up in this column just a couple of weeks ago. Now he’s back, with one of the most imaginatively spurious crypto arguments we’ve heard since… well, the case for Ripple.

A recent Cornell University paper found that 98% of transactions that occurred on the XRP ledger were zero value transactions — the blockchain equivalent of spam.

Schwartz defended the ledger, arguing that spam was evidence of its extraordinary product-market fit:

I believe it. Transactions are so fast and cheap and the ledger has so much capacity, little incentive not to submit near zero value txns. Not long ago, 50% off all public decentralized ledger txns were on XRPL!

If this whole CTO thing doesn’t work out for him, a career in Public Relations surely awaits.

Visitors to Ripple’s website are instantly greeted with a message touting its ability to “Instantly Move Money to All Corners of the World.”

Now it can add spam to that single-item list.

Instantly Send Spam to All Corners of the World

Schwartz’s response is straight out of the Public Relations 101 handbook. Turn a bug into a feature and boast about it. The majority, as he claimed, of those zero value transactions are “harmless bots that fight for positions in the order books.”

Still… spam sprinkling is hardly what Ripple Labs would have had in mind when designing the XRP ledger. Its first use case appears to be “enabling Jed McCaleb to dump XRP on the beloved Ripple Army”. He sold 54 million of them in April.

(Yes, you read that correctly: ex-founder Jed McCaleb earns more — a LOT more, each year — than JPMorgan CEO Jamie Dimon, just by selling his billions of XRP tokens at a steady rate.)

Second use case: bank-to-bank transfers.

But to be honest, “Pointless circular activity that achieves nothing but doesn’t actually harm anyone” hardly counts as a ringing endorsement for the company’s goal of making cross-border transactions fluid and cheap.

Schwartz’s response may have earned him a handful of high fives from San Francisco’s most creative PR department. But for this week it also earns him the Epic Fail award.

Nailed It

We’re Upvoting Reddit

Rumors started circling in April that Reddit was tinkering with a token-based tipping mechanism on the platform. This week, it was revealed those rumors were well-founded.

And the beautifully expressed rationale was clear:

In the beginning, the Internet was a free frontier — a land of openness, creativity and possibility… Then the amusement parks opened. Millions abandoned the frontier, drawn to the glitzy rides and manicured lawns… At first, everyone loved the parks. Until they built walls and billboards. And spied, manipulated, and censored the people.

Which is exactly the reason Google really seems to hate crypto and Facebook wants to co-opt it.

But now one of the largest online communities on Earth is embracing crypto and tokenization. According to Alexa, Reddit is the world’s 19th most visited website. To put that into context, Twitter ranks 47th.

The massive American social news aggregation, web content rating, and discussion website is trialing the tokenization of its community points system in two subreddits: r/cryptocurrency and r/FortniteBR. Between them, they have over two million subscribers.

It is almost more surprising that Reddit took as long as it did to embrace cryptocurrency. Industry chatter is widely-disseminated on the platform, and the demographics of its user base (skewing young, male, and interested in tech) overlap strongly with the crypto community.

Reddit Moons

Reddit will distribute tokens to users within the subreddits based on their current levels of karma. Community points will be named according to the subreddit in which they are earned, with the cryptocurrency subreddit’s reward tokens to be labeled “Moons”.

The tokens can be traded between users or used for different things within the platform, such as for displaying reputation, unlocking badges, GIFs, and other features. They also lend holders voting weight in polls.

The popular community chat site is a welcome addition to the growing family of tokenized forums. Moreover, the structure of the initiative is a demonstration of pure decentralization. As Reddit explained:

“Community Points are fully controlled by the people who own them. They live on the Ethereum blockchain, which uses the same technology to guarantee property rights and control. Even Reddit cannot take them away.”

Reddit. Welcome to the crypto fold. This week you Nailed It.

Opinions expressed in this column are those of the author.

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Paul de Havilland

Paul de Havilland is a fan of disruptive technologies, and an enthusiastic investor in startups. He has covered both traditional and emerging asset classes, and also writes extensively on politics and development. His passions include violin and opera.